The rumours and whispers have grown so strong, so convincing, that now even the Australian Treasurer, Peter Costello, has been forced to publicly state Australia did not play a r0le in overthrowing the government of East Timor.

"It's absolutely false that Australia has intervened in any way in the political line-up in East Timor," he said on Channel 9.

"Australia, by the way, has troops that are serving, in difficult conditions, the East Timorese people, keeping law and order on the streets.

"Those troops are there at the invitation of the president and the then prime minister Mr Alkatiri. So they were asked to be there."

Well, that's not quite true now is it Mr Treasurer?

Australian ships and helicopters and ground vehicles and troops were sent to East Timor with the expectation that the Prime Minister Alkatiri would ask for Australian troops to come in and help out, at the height of the rioting, the burning and the killings last month. But he refused to commit for days, unsure of what the role of foreign peacekeepers should be in East Timor.

Alkatiri feared a coup back then, and warned his supporters that this might happen. Now he has been forced to quit, his supporters believe his prediction has come true.

The Australian Treasurer plays dumb when it comes to discussion of just how influence 1300 Australian troops, with gunned up trucks and Blackhawk helicopters, can have on local happenings in East Timor.

"To claim that they've engaged in domestic politics is absolutely false and I can say that for a fact."

This is a ridiculous thing to say and Costello knows it.

Any time foreign troops enter a sovereign country, and are seen to be protecting, or keeping watch over anti-government forces, as Australians did, then they are becoming involved in domestic politics.

It's not getting any better in East Timor. The government is in chaos after Alkatiri quit. and he is now being accused of arming kill squads to take out his political enemies in the early days of the current conflict.

Their bodies trembled with fear. They sobbed. They stared wide-eyed, heads bowed. They were mostly women and children, huddled at the gate of Dili's main wharf yesterday.

They had been chased there by anti-Alkatiri rioters who then stood on the road 20 metres away, screaming threats. "We're going to kill you all," a mob leader yelled. "You are all dead."

All that mattered to the rioters, who were frothing at the mouth and screaming incoherently, was that they believed the petrified women and children they had bailed up were from East Timor's east.

That's how far East Timor's conflict has gone: Timorese attacking strangers because of where they were born.

Australian troops are heavily restricted by their rules of engagement in East Timor. They can't open fire unless they feel their lives are directly threatened, but the rioters aren't targeting the troops. They go after women and children and the houses and businesses of those they view as their enemies.

...the soldiers must remain "neutral". Major James Baker, the spokesman for Australia's peacekeeping force in Dili, said: "Our soldiers are taught to have a measured response to defuse any situation which might arise. Our job is to make sure the feuding parties are separated."

The soldiers jumped out and chased the culprits, one of them screaming "Come here, you little f---ers." The soldier ran down and grabbed the slowest by the neck before bundling him into one of the vehicles. The rest of the rioters escaped, free to terrorise elsewhere.

Australian journalist John Pilger has covered events in East Timor from the early 1970s, when Australia first refused to interfere with the ongoing Indonesian genocide that wiped out 1/3 of the entire population over the next two decades. Here's an excerpt of his take on what's happening in East Timor today :

These days Australia likes to present itself as a helpful, generous neighbor of East Timor, after public opinion forced the government of John Howard to lead a UN peacekeeping force six years ago.

East Timor is now an independent state, thanks to the courage of its people and a tenacious resistance led by the liberation movement Fretilin, which in 2001 swept to political power in the first democratic elections. In regional elections last year, 80 percent of votes went to Fretilin, led by Prime Minister Mari Alkatiri, a convinced "economic nationalist," who opposes privatization and interference by the World Bank.

Barely three days after Prime Minister Alkatiri stepped down, the World Bank has made it known that it "stands ready to assist in any way we can."

World Bank President Paul Wolfowitz was one of the most insidious of all the NeoCons who lied their country into the brutal 'War On Iraq', later admitting that the story of Saddam's WMDs was just a cover story to help sell the war.